Tax benefits of owning your home

Tax benefits of owning your home

Oceans of paper have been filled with dissertations whether it is more beneficial to rent vs. own your home. You can read our own take on it here… One thing that very few sources mention are potential tax benefits* of owning your home. In some cases they can tip the scale substantially towards the ownership side.

How can owning a house save you money?

1. Mortgage interest

Chances are that you have a mortgage on your house. And at the end of each year you’re receiving a form from your financial institution detailing how much interest you’ve paid over the course of the year. Save that form. Interest paid on mortgage used to finance your primary residence is tax deductible. But you probably knew that. Mortgage interest deduction is one of the most common ones claimed by tax payers.

2. Property tax deduction

You may deduct up to $10,000 ($5,000 if married filing separately) for a combination of property taxes and either state and local income taxes or sales taxes.

You might be able to deduct property and real estate taxes you pay on your:

  • Primary home
  • Co-op apartment
  • Vacation homes
  • Land

3. Home office deduction

Do you run small business out of your home? Is that space used exclusively for business? If yes the IRS allows you to deduct utilities, real estate taxes, repairs, maintenance and other related expenses. The details of this deduction are too complex to list it in this post, but the simplest way is to claim standard deduction of $5 per square foot (up to $1,500) of the space dedicated as office use.

4. Energy efficiency updates and credits

As a homeowners can claim a federal tax credit for making certain improvements to their homes or installing appliances that are designed to boost energy efficiency. Solar, wind, geothermal, and fuel cell technology are all eligible for the Residential Renewable Energy Tax Credit.

Disclaimer: we are Realtors, not tax attorneys or CPA, so the above should be treated as anecdotal. Please consult with your tax preparer before you claim any of the credits.

Tips around the house

Spring around the house

First warm days of season are upon us, and with this, it feels good just going outside after long months of cabin fever (particularly if you live up North). It is a good time to take a walk around your house, backyard, and garden, and check on everything after the winter season. Even if you live in an apartment, there are things you can do, so please continue reading our tips collected from around the Internet.

On your balcony or deck

  • Clean patio furniture. Soapy water and soft brush or sponge will do the trick for most types of materials.
  • Wash the pillows and outdoor rugs. Check the manufacturer’s instruction if fabrics can be washed in the washing machine.
  • Give your grill thorough scrub. Long-handled stiff-wire brush works on all types of grates.
  • Refill propane tank for grill to be ready for first grilling of the season (we already started ours!)
  • Check the deck surface: does it need any repairs? Maybe fresh coat of paint is in order this year?
  • Consider planting containers with ornamental plants, maybe even vegetables or herbs. Particularly if you do not have a big yard or live in condo, few containers will add life to your outdoor space.

Around the outside of your house

  • Wash your windows, from outside and inside. You will see so much more light coming in. My recently discovered quick tip – glass cleaner and squeegee.
  • Replace any used exterior light bulbs, on house walls, in the walkways, on the deck.
  • Check and clean gutters and spouts, make repairs if needed.
  • Hose down or power wash home exterior.
  • Check your roof for any obvious problems.
  • Check your fence if you have one: does it need any repairs? Is it in need of fresh coat of paint?

Lawn and backyard

  • Clean your lawn: brush back all remaining fall leaves and remove fallen branches. Pick up litter and any pet waste.
  • Identify bold spots in your lawn. Mix seeds with fresh soil and fertilizer and seed fresh grass. Remember to keep it moist until it starts growing!
  • Prune all shrubs and trees – it will encourage new growth
  • Check water hoses for cracks and leaks. Make any needed repairs – or buy new parts.

In the garden (or container garden)

  • Remove winter layer of mulch if you had any placed to cover plants from freezing
  • Add new layer of mulch around trees and shrubs
  • Cut majority of stalks of ornamental grasses to have them come back fresh
  • Pull any dead annuals. Consider replacing them new ones?
  • Remove dead growth of perennials, they will come back fresh and strong.
  • Take an inventory of plants you already have – and start planing what you want to add when time comes. Make shopping list of seeds or plants.
  • Build new vegetable beds if you need more/new ones. They will be ready when you need them!
  • Now it is also good time to seed cold-loving vegetables, for example salad greens or radishes. You will be able to enjoy them in no time.

Staging a house

Did you know?

In 2019, the National Association of Realtors (NAR) conducted a Profile of Home Staging and found that 28% agents stage homes they list for sale, while 13% of agents admitted to staging only difficult to sale homes. Of those agents, 22% reported that their homes sold for 1% to 5% more thanks to staging, 17% said their homes sold for 6% to 10% more. About a third thought that staging decreased the time the house was on the market.

9 basic tips for house staging

Staging the home you continue living in is a bit different than staging an empty place. Your focus should be on showing how much space there is already in your home, how much natural light there is and how much storage your house offers. Keep also in mind that having your house presentable is equally important in the Seller Market like we experience right now, not only in Byers Market! You do want to secure more offers and ultimately get a better price – and have house sold in less time.

Here are some quick ideas how to approach staging your own place, with items you already own. It is as much about addition as it is about subtraction!

  1. Start from improving your house curb appeal by tidying the yard and exterior. Mow the lawn, clean last year leaves and weeds, trim the plants, organize toys and sporting equipment. Consider power washing the siding.
  2. Focus on main areas. Buyers pays the most attention to: living room and master bedroom. If there is a master suite, master bathroom is a must.
  3. Make the place look inviting – and sparking Buyers imagination of their family occupying the space. It has to look lived in, at the same time not too personal. Remove your family photos, put away your clothes and toiletries. Add some tasteful art or nature and landscape photos. Put up pillows and plants to add color and life.
  4. Declutter. If you choose to follow only one tip on the list, this would be the one.  Spend time putting away things you do not use very often. You can even already pack them away in moving boxes. Keep shelves, tables and countertops minimal – but leave out some neutral decorations (again, flowers, natural objects like shells etc.).
  5. Reduce the amount of furniture in rooms. Make the space visually larger, and give Buyers space to walk and their children to run.
  6. Remove about two thirds of items from all storage spaces. That including closets, kitchen cabinets, pantry. This will help to highlight how spacious they are.
  7. Deep clean all nooks and crannies. Now it’s the time for that deep cleaning you were postponing. Potential Buyers will really look everywhere!
  8. Consider repainting rooms in modern neutral colors to refresh the walls. This is particularly crucial if your taste is in bold colors that might not suit everyone and scare more traditional Buyers.
  9. For showings, open all curtains and blinds, and turn on all the lights. The more light, the more welcoming your place will look.

Selling during COVID pandemic

Selling during COVID pandemic

The real estate market in South Central Wisconsin continues to be hot, with record low inventory of houses for sale. Per WRA data for January 2021, the number of houses for sale on the market was 43% lower than in January last year.

There are several reasons for the market situation. Low interest rate entice buyers to look for new and better place, while COVID makes sellers hesitant to open house to a lot of strangers. Those reasons and others, bring the ultimate sale price up among multiple offers competition.

If you are ready or seriously thinking about selling your current house and move or upgrade, now is the perfect time to do that. We prepared a guide for you to address some of your concerns how your COVID concerns can be accommodated.


Rent or buy?

This is probably one of the most often asked questions and at the same time one that almost never has a clear cut answer. Our lives differ and what makes it even harder to answer this question is that everyone looks at life through their past experiences and biases.

When our clients or prospects ask us this question here is what we say…

Do you enjoy making your house your home?

Owning a house comes with great freedom of making it your own. While renting, the most you can ask for is probably paint change, but don’t expect to be presented with choice other than white, gray or beige. No landlord will agree to blue, green, red or any other non bland, neutral color, for fear of not being able to rent it again when you leave. Would you like to plant a raised bed garden? Install a play set with slide for your kid? You can forget about it when you rent.

Nobody will kick you out or increase your rent!

Owning a house means that your life is protected. You won’t be surprised by landlord changes, sudden rent increases or outright refusal to renew. No maintenance visits either. How would you feel if somebody regularly ‘inspected’ all your closets or bedrooms?

Uncle Sam prefers home owners

Yes, it is rare that uncle Sam is favoring one group over the other. Yet when it comes to owning the house the government clearly prefers that you own your home. To incentivize you to buy they allow you to deduct interest you pay on your mortgage from your taxes (as always, we are not tax professionals so please ask your tax preparer for details).

Your home can be your retirement fund or savings account

We all know how hard it is to save for the future. There is always this or that expense that gets in the way of regular contributions into your savings account. How about your house? Every single one of your monthly mortgage payments contains growing principal portion. Your equity is growing every month. I don’t know about you, but I appreciate this and am relived that my net worth is constantly growing.

And it brings interest!

Real estate traditionally is the safest way to conservatively grow your wealth. Properties appreciate on average between 5 and 10% every year. Not only does your equity grow because you make monthly contributions. It also brings interest!

One more thing – monthly cost in most cases will be lower

When you rent you not only have to pay for somebody else’s mortgage payment on the house. They also need to pay their property manager, accountant, build some nice maintenance reserves, pay business insurance and in the end, bring a profit. This all usually adds up to about 15% premium over what you would pay as an owner on the same property.

Is it all roses then, right?

Of course not. Sometimes it makes sense to rent. Here are some arguments for renting:

Are you planning to live in the place for at least 4-5 years?

As fun and rewarding as owning a house is, selling it comes with a cost. In addition to our commission you will have to credit the Buyer with prorated property taxes, in some states provide home warranty and title insurance and probably pay for some maintenance, upgrades or repairs requested by the future owners. On average you have to budget between 8 and 10% of your selling price as your cost of selling. Considering that in the beginning your monthly payments cover mostly interest it pays to wait few years before selling to build equity and let the house appreciate. If you plan for short stay, better rent.

Can you do small fixes on your own?

I’m not talking remodeling your kitchen or replacing roof, those are best to be left to professionals. Yet there are many small things (like replacing light bulbs, smoke detectors, cleaning dryer vent or cleaning siding and windows that are normally handled by the owner when you rent). All those are typically included in rent (see the mention of the own maintenance reserves) but if you can do them on your own in your house it will cost you only pennies on the dollar and will greatly lower your cost of ownership. On the other hand if you can’t tell which side of the screwdriver is the business end – better consider renting. The owner will have properly trained crew on call that will take care of those issues efficiently and quickly.

Rent vs. Own. There is no right answer. Only you can make that decision. No matter which way do you choose to go, we’re here to help. Let us know if you have any additional questions or comments, we’ll be happy to help!


Comfort creatures

We are. All of us.

But what is comfort? How/when can you say that your house is comfortable?

Let me ask you a question. Is your bathroom comfortable? The first thing that will probably come to your mind is ‘he’s nuts’. But then you start thinking about things and you’ll probably come up with one or two features that you’d say can be evaluated in terms of comfort. Yes, softness of the toilet seat would be one of them.

What if I told you that your bathroom is the most critical room in your house with the greatest potential to make or break your day?

Heresy? Don’t think so.

Let me take you on a journey through the perfect bathroom.

As you step in through the door the light comes on. Depending on the time of day or night it might be tiny dimmed warm accent light letting you find your way around, or it might be full blown ‘we’re shooting TV show here’ make up preparation daylight colored light assault.

Your feet step on nicely textured delicately warmed tiles. The floor is constantly kept 2 degrees above ambient air temperature to give you that great comfortable feeling. You know, the one that makes you remember with smile all the times you stepped barefoot on a stone cold tiles and shivered. You’ll never feel it again.

You follow to the shower, open tap and wait a second or two. It doesn’t take too long, mere seconds. The thermostatic shower valve automatically mixes hot and cold water to deliver that perfect one you love. And it keeps it there no matter how many taps, washers or showers are running in the house. No matter what, you get your perfect shower. Every day.

You step out and grab the towel. Yup you’ve guessed it. Towel rack is heated too. The sensor turned it on right when you came in, it works fast and effortlessly preheats the towel so you can dry yourself with a smile. It’ll keep it warm for few more minutes to help it dry fast.

Now it’s makeup time. Every day when you do it you think how great it is that the vanity is just about 1″ higher than the standard. You’re 6’2″ and for years felt like adult in children room, now you’ve got your perfect height and you’re oh so happy to never experience back pain after after spending 15 minutes in front of the mirror bent like a coat hanger.

You leave the room smiling and ready to fight all the dragons…

Too good to be true? Too expensive?

You don’t have to fully remodel your bathroom to get it. Most of the features I’ve mentioned can be affordably retrofitted to almost any bathroom no matter what size.

How do you define comfort? Tell us what do you thing.

Comment, send us a text message (608 282 5010) or call us (877 456 7935). We love talking comfort!